Who Wants To Be A T&e Brainiac? #1

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1. What is "DNI?"

Explanation

Correct Answer: C.

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Estate Planning Quizzes & Trivia

Want to challenge your knowledge or just have a little fun? Take our "Who wants to be Estate Planning Brainiac" quiz.
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2. If a client transfers an insurance policy on his life to an irrevocable trust and dies the following year, how much of the insurance proceeds will be included in the client's estate?

Explanation

Correct Answer: C. Section 2035 (the transfer within three years of death rule) will cause all of the policy proceeds to be included in the estate.

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3. If someone died in 2010, does the estate automatically escape federal estate taxation?

Explanation

Correct Answer: B. The estate is automatically subject to federal estate unless it files an election out.

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4. What duty did the Treasury Department impose upon the practitioner in charge of the firm's tax or trusts & estates department under circular 230 as of August 2, 2011?

Explanation

Correct Answer: C

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5. Do Crummey withdrawal powers allow gifts to qualify for the GST annual exclusion?

Explanation

Correct Answer: C. The requirements for qualifying for the gift tax annual exclusion and GST annual exclusion are different, and the trust must be drafted in accordance with applicable GST regulations to qualify for the latter. The annual exclusion protects property in a trust from GST tax only if the trust is one described in Section 2642(c)(2) which is one for only one beneficiary (e.g., a grandchild). However, exemption from GST taxation can be achieved using “Cascading Crummey Power(sm)” which is offered in the Wealth Transfer Planning™ system.

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6. Which is likely to best the most efficient estate and generation-skipping transfer tax reduction strategy for property with the potential for appreciation?

Explanation

Correct Answer: C. A study presented at Heckerling established that proposition. D "works" only if the insured dies early. Almost all term policies end by the time the insured reaches age 80.

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7. Which of the following is true?

Explanation

Correct Answer: F. None is true. As to “a”: Even when George W. Bush and the Republicans swept in 2000 and despite his claim that repealing the estate tax was his number one domestic agenda, he was only able to get a one year repeal (2010).

As to “b”: President Obama has consistently recommended a $3.5 million estate tax exemption and a 45% rate. It seems likely he will get his wish and compared to doing nothing (which would result in a $1 million exemption and a 55% rate), it seems likely Republicans would not oppose it.

As to “c”: what happened in December 2010, when President Obama made a tax “deal” with Senators McConnell and Kyl, indicates a deal to change the estate tax and prevent the exemption dropping to $1 million and rates to 55% will be reached.

As to “d”: Although some Republicans claim that repealing the estate tax would bolster the gross domestic product, virtually all independent agencies conclude otherwise [need citation for this]

As to “e”: the ramification would be significant. See Blattmachr & Gans, "Wealth Transfer Tax Repeal: Some Thoughts on Policy and Planning", Tax Notes, January 15, 2001.

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8. Which of the following statements about life insurance are true?

Explanation

Correct Answer: E None of the above are true. The transfer within three years of death rule of section 2035 does not apply if the trust initially acquires the policy. Policy proceeds are subject to income tax if the policy has been “transferred for value” (e.g., sold) unless an exception applies. Rev. Ruls. 2009-13 and 2009-14 provide that the basis of a policy sold (as opposed to returned to the insurance company) is premiums paid minus the value of the term insurance protection provided by the owner before sale.

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9. By what date must the election out of estate tax be filed?

Explanation

Correct Answer: C. As to D, the IRS is not permitted to grant extensions to make the election. For adults only: the IRS could extend the filing date for everyone but it has stated it will not do so.

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10. In which of the following circumstances will it almost certainly make sense to stay IN the Federal estate tax system for a 2010 decedent?

Explanation

Correct Answer: E -- Probably NONE should be checked. Even if the estate if less than $5 million, estate tax may still be due on account of adjusted table gifts. Also, if certain assets would have a "step down" in basis (such as a QTIP trust that would be included in the decedent's estate if there were an estate tax), it may better to elect out of estate tax. Even if the basis of carryover basis assets is less than date of death values, the basis of carryover basis assets may be increased by the special basis increase of $1.3 million under section 1022(b) or $3.0 million under section 1022(c) for qualified spousal property. On state estate tax, it might be preferable to stay in the federal estate tax system if there is a state death tax because the state death tax is estate tax deductible under section 2058; however, other facts likely would be more important.

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What is "DNI?"
If a client transfers an insurance policy on his life to an...
If someone died in 2010, does the estate automatically escape federal...
What duty did the Treasury Department impose upon the practitioner in...
Do Crummey withdrawal powers allow gifts to qualify for the GST annual...
Which is likely to best the most efficient estate and...
Which of the following is true?
Which of the following statements about life insurance are true?
By what date must the election out of estate tax be filed?
In which of the following circumstances will it almost certainly...
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